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7Twelve Investment Strategy

The 7Twelve Investment Strategy


What is 7Twelve?

7Twelve is a blueprint to build a well-diversified investment strategy. Unlike traditional two-asset 60-40 balanced, the 7Twelve uses multiple asset classes in an effort to enhance performance and/or reduce risk.

Our balanced strategy provides investors access to non-traditional assets such as real estate, commodities, and emerging markets.


Each asset adds an important dimension to the portfolio because of the low correlation and behavior between them.


The 7 of 7Twelve represents the suggested number of asset classes to include. The Twelve represents the 12 underlying investments. 

Why Diversified?

Most investors are under-diversified. For example, they do not own commodities or real estate despite the fact that these two asset classes make up over 41% of all global investable assets. Holding these together with stocks, bonds, and cash in one inseparable portfolio helps make the world safe for non-traditional assets.

Additionally, Professors Brad M. Barber and Terrance Odean wrote, “Some investors fail to take advantage of the full benefits of diversification. Under-diversified investors might over-invest in company stock, local stocks, famil­iar stocks, and domestic companies. Doing so may make them feel safe, but it leaves them exposed to increased volatility in their investment returns.” Source: Handbook of the Economics of Finance, 2013.
The 7Twelve strategy seeks to provide breadth across seven core asset classes, and diversification depth within each separate fund in the portfolio.

Why 7 Asset Classes?

7 Assets are the building blocks

The 7Twelve strategy uses multiple asset classes to seek to  enhance performance and reduce risk.

The traditional equation of two asset classes – U.S. stocks and U.S. bonds – may not add up to greater returns and less volatility. 

The long-term success of the 7Twelve strategy may be the result of genuine diversification across these seven core asset classes.

So: 7Twelve is a diversification tool for the under-diversified.

The 12 Underlying Investments

The 7Twelve strategy uses multiple asset classes: equities, fixed-income, traditional assets, and non-traditional assets. The strategy invests approximately 8.3% in each asset class.

Equity assets
Fixed income assets

There are two ways to invest: predict the market,
or equally-weight. Equal-weighting is the reality
that we cannot consistently pick winners.

 Why Equally Weight?

If you could consistently pick winners it would be settled science that market-cap weighted portfolios outperform equally-weighted portfolios. 

Equal-weighting puts one important decision for you and your clients on auto-pilot and frees up your time for the decisions over which you actually have control.

An equally-weighted portfolio may be effective in today’s turbulent times. “Equal weighting’s prospects improve when forecasting is difficult, when there are lots of investment choices and when the historical learning sample is limited. That more or less describes the profile of the capital markets.”

Building a Better Balanced Fund

We believe the balanced strategy was a wonderful invention in 1929 by Walter L. Morgan, a Philadelphia CPA. It was roughly 60% US stocks and 40% US bonds. However it missed some important elements that may respond well in a variety of markets: non-US stocks, non-US bonds, Real Estate, Commodities, and Cash. Including these in a portfolio may either improve returns or lower risk. 

 Why Indexed based?

At the 15-year horizon in both asset classes (equity and fixed income), there were no categories in which the majority of active managers outperformed.

Source: SPIVA U.S. Year-End 2023 - S&P Global

The information contained herein is for educational purposes only and is not to be considered investment advice nor a recommendation of any fund, product or investment. Information is obtained from third-party sources which are believed to be reliable, but have not been independently verified by 7Twelve. “7Twelve” is a trademark. 7Twelve™, 7Twelve Advisors, LLC, and all strategies, models, adaptations, and products created from said intellectual property are the sole ownership of Craig L. Israelsen, PhD, and/or 7Twelve Advisors, LLC.

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